FTC Sues Amazon for 'Scamming' Millions into Prime Subscription

The U.S. Federal Trade Commission on Wednesday sued Amazon for its "yearslong effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their subscriptions."

The agency's lawsuit accuses Amazon of violating the FTC Act and the Restore Online Shoppers' Confidence Act and seeks a permanent injunction, civil penalties, and monetary relief. It was filed with the U.S. District Court for the Western District of Washington, which is located in Seattle, where Amazon is headquartered.

"Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime," the FTC said in a statement. "Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as 'dark patterns' to trick consumers into enrolling in automatically renewing Prime subscriptions."

"Amazon should not be allowed to continue tricking or scamming people in order to maintain its grip on consumers and control the market."

In addition, the e-commerce giant "knowingly complicated the cancellation process for Prime subscribers who sought to end their membership," the agency continued. "The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them. Amazon leadership slowed or rejected changes that would've made it easier for users to cancel Prime because those changes adversely affected Amazon's bottom line."

The number of Prime members worldwide surged from 100 million in 2017 to more than 200 million in 2020, according to annual shareholder letters written by the company's megabillionaire founder and former CEO, Jeff Bezos.

A membership currently costs $139 a year or $14.99 a month in the United States and provides access to Amazon's video streaming service as well as faster shipping on products purchased through the online retailer. According to the FTC's legal complaint, Prime subscription fees alone account for $25 billion of the corporation's annual revenue, and subscribers spend more money on the site, on average, than non-Prime shoppers.

"Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money," said FTC Chair Lina Khan. "These manipulative tactics harm consumers and law-abiding businesses alike."

The complaint remains heavily redacted, though the FTC told the court it does not see a compelling reason to maintain secrecy moving forward. In a statement, regulators summarized their allegations of how Amazon intentionally uses so-called "dark patterns" to deceive consumers into joining Prime and to deter them from quitting:

During Amazon's online checkout process, consumers were faced with numerous opportunities to subscribe to Amazon Prime at $14.99/month. In many cases, the option to purchase items on Amazon without subscribing to Prime was more difficult for consumers to locate. In some cases, the button presented to consumers to complete their transaction did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.

The FTC charges that Amazon put in place a cancellation process designed to deter consumers from successfully unsubscribing from Prime. Previous reporting about the process in the media has noted that Amazon used the term "Iliad" to describe the process, which the reporting cites as an allusion to Homer's epic poem set over 24 books and nearly 16,000 lines about the decadelong Trojan War.

Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of canceling, according to the complaint. Consumers had to first locate the cancellation flow, which Amazon made difficult. Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages could consumers finally cancel the service.

"Amazon was aware of consumers being nonconsensually enrolled and the complex and confusing process to cancel Prime," the agency added. "The company's executives failed to take any meaningful steps to address the issues until they were aware of the FTC investigation."

On social media, Khan said that "Amazon's counsel stonewalled the FTC's investigation through misdirection and delay. The extent of Amazon's obstruction became clear after an insider leaked documents to Business Insider."

"This lawsuit builds on our ongoing work to protect Americans from firms who trick people into subscriptions and then trap them by making it hard to cancel," said Khan. "Our proposed 'click to cancel' rule would require that firms make it as easy to cancel a subscription as it is to sign up for one."

The FTC is collecting public comments on the proposal through Thursday. Feedback can be submitted here.

Progressives welcomed the agency's lawsuit against Amazon.

"We applaud the FTC for suing Amazon to stop it from trapping people in Amazon Prime and sabotaging consumers' efforts to cancel it," Demand Progress communications director Maria Langholz said in a statement. "We urge the commission to take further steps to rein in the proliferation of abusive tactics utilized by Amazon and other Big Tech companies, particularly 'dark patterns' online that manipulate customers into subscription traps."

"Amazon should not be allowed to continue tricking or scamming people in order to maintain its grip on consumers and control the market," said Langholz. "We call on the FTC, as well as other federal agencies and Congress, to investigate and bring accountability to the full range of abuses of power by Amazon and other Big Tech giants."

In addition to allegedly taking advantage of consumers, Amazon is also notorious for abusing its warehouse workers and delivery drivers.

The FTC's complaint comes one day after U.S. Sen. Bernie Sanders (I-Vt.) launched a probe into what he called Amazon's "dangerous and illegal" working conditions.